australian on short turn contract; subcontractor or employee?

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CADMAX

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#74699 5-Jan-2011 19:25

hi all.

some one must be doing what I'm going to be doing later this year.

i will be working for a year (8 weeks in Oz and 2 in NZ) in Australian on contract now they have asked if i want to do it as a subcontractor or as a employee.

what are the pros and cons.

also whats the best way to pay the least tax on it once i get back over here, i work for my self over here in NZ.

also any one worth talking to about it here? i don't mind paying a consultant if they are good.

-AJ

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

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#424396 5-Jan-2011 20:02

definitely employee - 9% minimum superannuation employer contribution, sick and annual leave, penalty (overtime) rates. in a way, your conditions are protected with a minimum 'standards'. some employers provide subsidised or even freebies like car, food etc etc (sorry not sure about this but highly possible in big corporates), or tax relief packages

however if as a contractor you should be looking at a much higher hourly rate as the entire package above is bundled into the hourly rate - you have no super, you dont get paid for taking leave, there is no 'overtime', etc - i dont know but i would seek around 30 - 50% higher rate for being a contractor.

sorry taxation is complicated.

CADMAX

274 posts

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#424440 5-Jan-2011 22:41

joker97: definitely employee - 9% minimum superannuation employer contribution, sick and annual leave, penalty (overtime) rates. in a way, your conditions are protected with a minimum 'standards'. some employers provide subsidised or even freebies like car, food etc etc (sorry not sure about this but highly possible in big corporates), or tax relief packages

however if as a contractor you should be looking at a much higher hourly rate as the entire package above is bundled into the hourly rate - you have no super, you dont get paid for taking leave, there is no 'overtime', etc - i dont know but i would seek around 30 - 50% higher rate for being a contractor.

sorry taxation is complicated.

i may take the 30 to 50% more then.

i have taken 2 sick days in 8 years, dont need a car. can one bring the super back to NZ?

the place i'm going to be working for seem hard arssed on 4 days on 4 days off is this a OZ thing or just them?

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

meesham

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#424547 6-Jan-2011 09:36

I'm not an accountant but I've operated as a subcontractor & employee in both NZ and Australia... If you operate as a contractor I believe you'll need to register for GST and complete a BAS (Business Activity Statements, similar to GST returns) every couple of months. I'd just operate as an employee, much less stress on your part and if you don't plan to return to Australia to work you can request your superannuation as you leave (or once the agreement between the 2 countries is finalised you'll be able to transfer it to your Kiwisaver account). There's also a rule where if more than 80% of your company's income comes from one source it'll be taxed as personal income, so any tax rate benefits will be lost anyway. If you operate as an employee you'll need to get a tax file number (TFN) otherwise you'll be taxed at the top income rate - and no matter what you'll need to complete a tax return at the end of the financial year.

Best bet is to speak to an accountant in Australia, if you're working in Perth I can recommend someone.

Regarding the 4 days on 4 days off I'm guessing you're working up in the mines, it can vary. I know people who do 2 weeks on 1 week off, 8 days on 8 days off, it really depends on where you're working and what you're doing, and if you have to fly in and out of the site.

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#424568 6-Jan-2011 10:39

i'm not saying they will offer you 30-50% more but as a contractor you "lose" many benefits and you should seek that much more - if they don't offer that much more the answer is easy. employee. if they do - then you need to do serious calculations - speak to an acountant - to see if it's worth it.

4 on 4 off is quite normal ...

stevonz

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#424573 6-Jan-2011 10:48

If you're based in NZ & the contract is AU, and paid out of AU I would strongly reccomend sub-contract model.

As you are NZ-based now, you can receive LAFHA (living away from home allowance) here in AU, and also claim business related expenses such as mobile phone, laptop, novated lease, stationery, internet expenses... LAFHA allows you to claim your rental costs before tax, and also receive a daily food allowance.

I use a company called ITG to manage this for me. I can put you in touch with the guy from QLD, who will direct you to their rep's from the other AU states; their website is www.myitg.com.

Cheers, Stevo

stevonz

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#424576 6-Jan-2011 10:53

Also, forgot to mention, ITG don't work for free. They'll take a %, but will cover you for your public liability/ private indeminity insurances.

As @meesham said, they have PSI legislation here that has some pitfalls, one being this 80/20 rule. With ITG you effectively become an employee of an ITG company... so this issue is removed.

Cheers, Stevo

CADMAX

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#424815 6-Jan-2011 23:02

Regarding the 4 days on 4 days off I'm guessing you're working up in the mines, it can vary. I know people who do 2 weeks on 1 week off, 8 days on 8 days off, it really depends on where you're working and what you're doing, and if you have to fly in and out of the site.

thanks could you PM the name of the accountant?

thanks :)

also its laying cable around some mines.

and to every one, a big thanks :)

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.